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Buoyed by its acquisition of Associated Grocers, Inc. nine months ago, Unified Grocers yesterday posted improved performance for the fiscal third quarter ended June 28, 2008 over the year-ago period.
The retailer-owned cooperative reported sales of $1,017.1 million the third quarter vs. $790.6 million last year, a 28.6 percent increase. The company attributed $194.5 million of its sales growth for the quarter to customer business gained in the Pacific Northwest from the transaction with Seattle-based Associated Grocers (now known as the "Seattle operations"), which occurred at the beginning of Unified's 2008 fiscal year.
Continued growth in the company's existing customer base, plus inflationary effects, contributed an additional 3.3 percent in sales over last year.
Sales rose $735.9 million, or 31.6 percent, to $3,061.5 million for the 39 weeks ended June 28, compared with $2,325.6 million last year. Sales growth was $617.3 million from the Seattle operations, with the remaining sales growth coming mainly from the Unified's existing customer base, in addition to inflationary effects.
Operating income for the quarter increased $5.1 million to $19.2 million, vs. $14.1 million in the year-ago period. According to Unified, the combination of income from the Seattle operations and sales growth and inventory holding gains as a result of vendor price increases contributed to the improved performance over last year.
Accompanying these gains, however, were expenses and productivity issues connected with the expansion of Unified's Northern California distribution center during the third quarter of fiscal 2008.
Year-to-date operating income and net earnings for the period ended June 28 were $50.6 million and $12.2 million, compared with $43.9 million and $11.3 million last year. Sales growth and better operating performance were the main reasons for the growth in operating income.
Operating performance was helped by favorable workers' compensation adjustments in Unified's wholesale operations, profits in the Seattle operations, and inventory holding gains resulting from vendor price increases, but expenses related to investment in the company's Northern California distribution network, among them the closure of a warehouse and the expansion of the DC noted above, along with rising fuel costs and volatility in the equity markets, partly offset this income growth.
"In spite of a weak economic environment, we had a very good quarter," observed Unified president and c.e.o. Al Plamann. "Even without the gains from our Seattle division, we are doing well in a difficult business environment. Sales are up, earnings are up, and we are seeing improvements in many aspects of our business. Additionally, our wide product offering is allowing retailers to quickly adjust to changing consumer preferences at shelf level, ensuring that the right products are available at precisely the right time. Keeping pace with this changing product mix is critical, particularly in this economic environment."
Los Angeles-based Unified Grocers supplies independent retailers throughout the western United States, where it is the largest wholesale grocery distributor.